TNAG-2143-FCO40-3062-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 215

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Miss Marsdently Mr Furne

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02 OCT 1990

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Mr Paúl, HKD

HONG KONG AIRPORT

FROM: R J T McLaren

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W37 270 2156

6 September 1990

Mr Burns

Mr Davies, FED

1. Mr Christian Adams (PEP, DTI) telephoned this afternoon about a visit which Sir R Davidson (GEC) will shortly be making to Peking.

2.

Mr Adams said that he had already sought FED's help over one or two points. There was a further aspect on which he wished to seek my advice. This was the extent to which Sir R Davidson should be encouraged to speak to Prime Minister Li Peng (who he expected to meet) about the Hong Kong airport project, and whether he should seek to use the opportunity to put in a plug for Sir G Manzie of the Anglo/Japanese consortium, who might visit Peking later.

3. I said that our main concern at this stage was to get the Chinese to take a more forthcoming attitude towards the airport project. Ideally we would want them to issue a public statement which would make it clear that the project had their blessing; in any case we hoped that they would make encouraging noises when foreign bankers enquired about their attitude. We had made some progress, as Mr Adams knew, during Mr Maude's visit to Peking in July. But the Chinese were still talking about the need for further studies by their experts. One of the difficulties was underlying suspicion of British motives; though the Chinese seemed to have accepted that Hong Kong needed a new airport, they evidently believed that our main reason for pushing the project was the money we expected to make out of it. Against that background, I doubted whether advocacy by Sir R Davidson or Sir G Manzie, who had axes to grind, would do much to allay Chinese suspicions. It was more likely to reinforce them.

4. Mr Adams argued that, apart from securing a general Chinese blessing, we also needed to win their support for the involvement of British firms in the project. old friends of China like Sir R Davidson and Sir G Manzie, with personal links with Li Peng, could be helpful in this regard. We also needed to bear in mind that banks in the UK and elsewhere were unlikely to provide finance on a large scale unless the Chinese were prepared to back loans. Guarantees from the HKG/SARG were unlikely to be sufficient.

The

5. I drew attention to the risk that the Chinese would seek consultation over the project and a veto over decisions. Hong Kong Government would not accept this. As regards Sir R Davidson's visit, I agreed, after further discussion, that Sir R Davidson might mention Sir G Manzie's new private

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